House to hold hearing to assess $800 million LUMA-PREPA debt dispute

Energy Czar Josué Colón Ortiz

By THE STAR STAFF

The island Legislature announced on Sunday that it will investigate whether the government has an $800 million debt with LUMA Energy that is causing financial issues for the private operator.

House Government Committee Chairman Víctor Parés Otero said he will summon LUMA Energy President & CEO Juan Saca, Puerto Rico Electric Power Authority (PREPA) Executive Director Mary Carmen Zapata and Energy Czar Josué Colón Ortiz. The officials must present all relevant documentation and evidence, under oath, regarding the multimillion-dollar debt claims made by LUMA executives in Puerto Rico.

Parés Otero has given Saca and the government officials one week to gather the necessary data and documentation. He said the hearing would take place sometime next week and emphasized that attendance by all three parties is mandatory and cannot be delegated.

“Over the past few weeks, LUMA Energy management has made serious accusations, claiming that PREPA is withholding over $780 million. They allege that this nonpayment, which they say has persisted for more than a year, is primarily responsible for cutting nighttime brigade services and for the recent layoffs of 160 Puerto Rican workers,” the District 4 lawmaker noted. “The Energy Czar has denied the existence of this debt, as has PREPA’s executive director. We will bring all three of them together so they can present their evidence to the people of Puerto Rico.”

“I want to make this very clear: Saca, Zapata, and Colón will be summoned in the coming hours,” Parés Otero added. “I am allowing them one week to gather all documents related to the disputed financial transactions between PREPA and LUMA. Their appearance cannot be delegated; they must attend and respond to questions from the representatives of the people.” LUMA has claimed to possess evidence supporting its assertions, though it has yet to present it. The private operator of the island’s electric power transmission and distribution system “will need to provide this evidence at the hearing next week, where we will evaluate it thoroughly,” the committee chairman said. “The government representatives will do the same. On that day, we will determine who is telling the truth.”

Last Friday, LUMA management announced the immediate dismissal of 160 workers, citing nonpayment by PREPA as the reason for the layoffs. STAR sources indicate that FTI Consulting has confirmed the existence of the debt. LUMA Energy has written to its suppliers blaming PREPA for delays in payment, which prompted a response from PREPA on Saturday, stating that LUMA has failed to manage its funds adequately.

Since January, the House Government Committee has conducted four public hearings and an on-site inspection regarding LUMA Energy’s performance. The upcoming hearing will be the fifth and will specifically focus on financial transactions.

“The Energy Czar has confirmed, as noted by Eduardo Soria, executive director of the Puerto Rico Central Office for Recovery, Reconstruction, and Resilience (COR3) during a hearing held on September 22, that LUMA is not properly processing reimbursement requests for federal funds related to Hurricanes Irma and Maria in 2017, as well as Fiona in 2022,” Parés Otero said. “Additionally, concerns have been raised about the excessively high compensation packages for LUMA’s executives. Regardless of the reasons behind the layoffs and the ongoing allegations of nonpayment, we will clarify these matters in a few days.”

According to official data, LUMA has some $9,085,390 million in debt, of which it has only requested repayment for $284 million by May 2025.